I had a good chat with Morgan Housel at the Wall Street Journal about how easy it is for investors to sabotage their own portfolios due to our behavioral tendencies:
James Osborne, president of Bason Asset Management in Lakewood, Colo., recently met with a new client who benefited handsomely from the nearly six-year upward run by stocks.
The client balked at cutting his stake in one stock after it had grown to more than half his portfolio, even after Mr. Osborne explained the risk of not diversifying.
Asked if he would put half his money into the same stock if he was building a portfolio from scratch, the client said of course not.
“He saw these gains as ‘house money,’” Mr. Osborne says.